GT v International Protection Appeals Tribunal & Anor (Approved)

Factual and Procedural Background

Company A sued Company B for unpaid franchise fees and ancillary charges; Company B counterclaimed for unjust enrichment (overpaid equipment fees) relating to two franchise restaurants in The City, one at [Number] Main Street and the other in The City. Company B operated the franchises; Company A acted as franchisor. The parties had no written franchise agreements. Dispute arose after a breakdown in relations following refurbishment negotiations in 2014; Company B reduced payments from 10% to 7% of turnover for the [Number] Main Street premises from August 2018 and Company A terminated the franchises effective August 2019. Company A issued a summary summons seeking €106,505.02 (May 2020), the matter was adjourned to plenary, pleadings exchanged, and the trial concluded with judgment delivered by Judge Keane on 30 June 2026.

Legal Issues Presented

1. Whether the oral franchise agreement for the [Number] Main Street premises required Company B to pay a single undifferentiated franchise fee of 10% of turnover net of VAT or a 7% franchise fee plus a separate 3% equipment fee.
2. If a separate 3% equipment fee existed, whether that fee ceased once cumulative payments equalled the value of fit-out and refurbishment works carried out by Company A.
3. Whether Company B was entitled to make waiver of the 3% equipment fee a condition of permitting Company A to carry out further refurbishment works, or to cease paying that fee in 2018 while continuing to operate the franchise otherwise.
4. Whether the estimated €716,764 difference between cumulative 3% payments and actual fit-out/refurbishment costs constituted unjust enrichment of Company A at Company B's expense.
5. Whether Company B could deduct €16,370.57 invoiced for signage it ordered for the [Number] Main Street premises from amounts owed to Company A.
6. Whether Company B could deduct €10,241 (cheque dated 1 April 2020) which Company A applied to the account of third parties associated with Company B.

Arguments of the Parties

Company A's Arguments

• The agreed monthly payment for the [Number] Main Street franchise was a single undifferentiated 10% of turnover net of VAT (reflecting Company A ownership and fit-out obligations); invoices consistently recorded a single 10% figure.
• No separate contractual 3% equipment fee existed and no term required cessation of any part of the fee once cumulative payments matched actual costs; Company A was not obliged to waive fees as a condition of carrying out refurbishments.
• Company B's unilateral reduction of payments while continuing to operate the franchise constituted breach; Company A relied on established law that the innocent party must either affirm or rescind the contract, not partly repudiate it.
• Company A denied overpayment, invoked the Statute of Limitations, and opposed unjust enrichment relief on the pleaded facts.

Company B's Arguments

• Company B pleaded that the 10% was an aggregate of a 7% franchise fee and a separate 3% equipment fee intended to repay Company A's fit-out and subsequent refurbishments; it paid the equipment fee until it cumulatively exceeded the costs incurred by Company A.
• Company B sought approximately €907,000 (later recalculated to €716,765) as overpayment of equipment fees and Courts Act interest on those amounts.
• Company B contended it was entitled to deduct €16,370.57 for signage it ordered and €10,241 (cheque) from amounts otherwise owing to Company A.
• Alternatively, Company B advanced an unjust enrichment argument based on recovery of Company A's gain rather than Company B's loss, citing earlier authorities on approach to unjust enrichment.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first assessed the factual terms of the oral franchise agreement on the balance of probabilities. It preferred the evidence of Company A's principal representative and Company A's accounts witness and independent forensic accountant on key points: invoices consistently recorded a single undifferentiated 10% fee; Company A routinely charged 10% where it owned premises; no invoice or audited accounts recorded separate 7%/3% breakdown. The court found Company B's internal management account practice and its witnesses' perceptions insufficient to establish a contractual term of a separate, diminishing 3% equipment fee.

The court concluded the contractual term was a continuous, undifferentiated 10% fee for the [Number] Main Street premises, payable for the duration of the franchise regardless of cumulative payments or actual refurbishment costs.

Applying contract law principles (Suisse Atlantique and Lanes Group), the court held that Company B's unilateral reduction of payments from 10% to 7% while continuing to operate the franchise constituted a breach. The court rejected Company B's characterization of separate collateral equipment agreement and, even if such existed, found no proven breach by Company A (noting Company B had impeded refurbishments).

On unjust enrichment, the court applied the three-element test (Bank of Ireland Mortgage Bank v Murray and Dargamo): enrichment, at claimant's expense, and an unjust factor. The court found no unjust factor in the receipt of the payments and held Company B's alternative gain-based approach was unpleaded and unsupported by the facts.

The court rejected Company B's claimed deduction for signage because Company B ordered signage at its own risk outside any agreement and Company A never agreed to pay for it. The court, however, found Company B was entitled to a €10,241.18 credit because Company A had mistakenly applied a cheque from Company B to third parties' account and there was no evidence of lawful set-off against those third parties' accounts.

Holding and Implications

JUDGMENT FOR COMPANY A

Holding: The court entered judgment for Company A against Company B in the sum of €96,263.84, together with interest under the Late Payment Regulations; Company B's counterclaim was dismissed.

Implications: The direct effect is that Company B must pay Company A the judgment sum plus statutory interest; Company B's claims for unjust enrichment and signage deduction fail. The decision does not establish a novel precedent beyond applying established contract and unjust enrichment law to the factual matrix; no broader legal reform was announced.